Gujarat poll effect: GST changes likely on Friday

Finance ministers from Congress-ruled states say they have alerted the Centre about the problems in GST for several months, but it is only now with the Gujarat assembly election around the corner that the Modi regime has started heeding these suggestions.
Archis Mohan reports.

Finance ministers from Congress-run states will demand an overhaul of the Goods and Services Tax at the next GST Council meet in Guwahati on Friday, November 10.

These ministers will make specific suggestions to the Narendra D Modi government to provide succour to the MSME (micro, small and medium enterprises) sector, and give tax exemptions to those working in such industries, including jewellery, leather, textiles and bicycles.

The FMs said they have been flagging the problems in the GST regime for several months, but it is only now with criticism on the ground and the Gujarat assembly election around the corner that the Centre had started to pay heed to these suggestions.

"Still, the changes being made are too little, too late. The economy has entered a dark alley with no exit," Punjab Finance Minister Manpreet Singh Badal said.

Congress finance ministers, Badal said, will not make suggestions to score political points, but to improve the indirect tax regime.

GST meetings are minuted and the Congress suggestions made at the Srinagar and Hyderabad meetings are on record, the ministers added.

The Congress believes the Centre has not lived up to the ideal of 'cooperative federalism' that Prime Minister Modi and Finance Minister Arun Jaitley have frequently espoused, particularly in the context of the GST Council being an example of pooled sovereignty of states.

Karnataka Finance Minister Krishna Byre Gowda said all voices should be heard in the GST Council.

"Voices and suggestions should be heard on merit, not on size. That is the real spirit of cooperative federalism and the GST Council," Gowda said.

The Congress, along with other Opposition-run state governments, does not have the numbers to push an amendment through voting.

But Badal said the party didn't want to force any issue to a vote, even if to make a symbolic statement.

"The GST Council is not a Vidhan Sabha. I hope it never comes to a vote," Badal said.

The Congress will also suggest that number of tax returns that businesses need to file be rationalised.

"Currently, a taxpayer needs to file 37 returns a month if they run their businesses in each state and Union Territory, which in a year comes to 1,332 returns," Badal said.

The Congress also sees a problem with the compensation being paid to the state governments.

Gowda said initially it was estimated that only seven or eight states would require compensation.

But in the first cycle comprising the first two months of the regime, nearly all states had required compensation.

"There is no clarity if the government will manage the shortfall, or raise other taxes," the ministers stated.

They said they will raise the issues that the textile, tourism and constructions sectors are facing.

The party had flagged the problems with the GST Network, as a result the government constituted a group of ministers, it said.

The Congress ministers are not in favour of any Central Bureau of Investigation probe against Infosys -- which created the GSTN -- for glitches in the network.

Photograph: Danish Siddiqui/Reuters